Legal Question in Business Law in California

Re: incorporate or LLC

LLCs are better than corporations in selected situations including--

(1) Where the promoters will be guaranteeing third-party loans to the business, as is common in real estate and agriculture;

(2) Where one or more of the owners-to-be is not qualified to own S-corporation stock, e.g. a non-resident alien; and

(3) Where the organizational flexibility of the LLC is a clear advantage in structuring investment, management and control of the business.

In most other cases, the corporate form is slightly preferable because, among other things, it is better understood and has a longer history of decided case law.

In your case, either form of doing business would be nearly equally acceptable based on the limited set of facts given, and either would be preferable to conducting the business as a general partnership.

Re: incorporate or LLC

A corporation can subject you to double taxation, once on the corporation and again when dividends are paid to the stock holders. In an LLC, you do not have the double taxation situation.